American Funds Battles CA Over Broker Kickbacks

The companies that manage and distribute American Funds sued California's attorney general, claiming he does not have the jurisdiction to regulate the disclosure of deals with brokers who market its products.

Attorney General Bill Lockyer countered the motion by filing a lawsuit asserting jurisdiction and alleging that the two companies did not live up to their fiduciary duty to investors by failing to disclose that they paid $426 million in shelf-space payments to broker/dealers.